Okay, welcome to the afternoon sessions of the BofA Healthcare Conference. I'm Geoff Meacham. I'm the Senior Biopharma Analyst. We're here today on stage, and we're thrilled to have Royalty Pharma, Terry Coyne, CFO, Marshall Urist, Head of R&I. Sorry, I say R&D. Appreciate that. R&I. R&I. Yep. Yeah. Terry is just gonna go through a couple slides to set up the background and the company, then we'll do some questions. Great. Thanks, Geoff, and thanks for BofA for having us here. These are our normal forward-looking statements. Royalty Pharma is a fairly new public company. We went public in June of 2020, but we actually have been around for a long time as a private company. Company was founded in 1996. We have 85 employees. Our portfolio has over 45 approved and development stage products. 15 of these products are blockbuster products. We really try to prioritize investing in blockbuster products 'cause they tend to be the products that get the biggest, you know, the most resources from pharma, and they'd oftentimes tend to be the products that end up outperforming. When you look at our portfolio on the right side, you can see that we're diversified across products and therapeutic areas, and also marketers. Rare disease is our largest therapeutic area of 33%. Cancer, second at 22%. Going down the line, neurology, immunology, hematology, and cardiometabolic. Some of those areas I think are areas that we think will grow, particularly immunology, where we have a royalty in TREMFYA that we acquired in 2021. We're very excited about the prospects of that product. It's marketed by J&J for psoriasis and psoriatic arthritis, with some label expansion opportunities as well. Respiratory, we have a royalty in that we acquired last year, actually, a $1.3 billion transaction in GlaxoSmithKline's TRELEGY, which is a very important product for that company, and we think will be a good growth driver for our business. From a financial perspective, last year, we had $2.8 billion of top line, Adjusted Cash Receipts, $2.6 billion of Adjusted EBITDA, so a 92% EBITDA margin, which really speaks to the efficiency of the business model, and then $2.2 billion of bottom line. It's a very, very efficient business where we, you know, really are taking that cash that the business generates every year and reinvesting it in new value-enhancing royalties. When we think about the market opportunity, it's very large. Starting from the top, if you look at how much biopharma, sorry, how much academics and not-for-profits are gonna invest over the next decade, it's over $1 trillion. This is gonna create the next crop of new products for the biopharma industry and also a lot of new royalty opportunities for our business. If you move to the right, small and midcap biotech companies, so these are the unprofitable biotech companies, are going to have over $1 trillion of operating expenses over the next decade. This is a big opportunity for us to help fund that innovation for the most exciting products in the industry. Pharma's gonna have another $2 trillion. All of this is creating a lot of royalties for us and a lot of, you know, very big market opportunity. If you look to the right, you can see that the global pharma market is expected to have over $2 trillion of sales in 10 years from now. In our market, specifically, we've seen a lot of great growth. The number of transactions has increased six-fold since 2015, and the dollar value of transactions has increased tenfold. Over that period, Royalty Pharma has maintained a 50% share of the overall transaction dollar value of transactions, and we've had around a 25% share of the transactions by volume. When we think about our business in specifically, we've had a lot of momentum over the last few years. One of the things that we focus on is our funnel. We look at, on the left side, you can see the number of initial reviews, so that's really the top of the funnel, has increased by 75% since 2019. 200 initial reviews in 2019 grew to 350 initial reviews in 2022. Even more important is the in-depth review. These are the opportunities that pass that initial screen phase, where we decide that we're gonna really allocate resources and do more work, and that's also up 75%. That has translated to increased transaction value. Transactions, the dollar value of transactions that we've done, announced transactions, is up almost 60% over that period. This slide tells you a little bit about where we see what we see as the future for biopharma companies. We think that royalties are gonna become, and have become, a fundamental part of the way that the industry funds itself. You can see that there are a number of success stories so far. Starting from the top left, Immunomedics, that's a company where we gave them 13% of the capital that they raised over time. Biohaven on the top right, they've raised $3.2 billion, and we provided 26% of the capital. Overall, royalties for these four companies, Immunomedics, Biohaven, Cytokinetics, and BioCryst, have represented around 25% of the total capital that they've raised over their lives. This is, you know, this is the big idea for Royalty Pharma, is that over time, we think that every successful company, every successful biopharma company should have royalties as a part of their overall capital structure. In terms of Royalty Pharma's capital allocation over the next five years, at our Investor Day last year, we highlighted that over five years we expect to generate around $20 billion. We expect to have capacity to invest around $20 billion. When we sort of break that down into different buckets, $10 billion-$12 billion is our target for capital deployment in new royalties. That's gonna be our primary use of capital. Dividends, we pay a 2% dividend currently, and we're committed to continuing to pay the dividend. Most recently, we've added share repurchases as another tool to return capital to shareholders. We announced that we that our board at the end of March authorized a share repurchase program up to $1 billion through 2027. The last thing to point out is that we also have additional capacity through leverage. We're committed to maintaining our investment-grade credit rating, but we do have additional capacity to if the right opportunities come along to find new royalties, and that number ends up being, you know, much larger than the $10 billion-$12 billion target we've laid out, then we do feel like we have plenty of capacity to take advantage of those opportunities if they come along. We've had a very balanced approach to new investments over, you know, over the past 10 years or so. It's been a pretty healthy mix of both approved products and development stage products. If you look at the breakdown, we've invested $21 billion in cumulative capital deployed. 12 and a half billion dollars has been in approved, and $8.6 billion has been in development stage. That comes to around 59%, 60% of our total capital deployed has been in approved products. Going forward, we would expect to maintain a pretty healthy mix of, you know, both approved and development stage products. The last slide here is just, you know, overall that we view Royalty Pharma as a very unique way to for investors to access biopharma. From a growth perspective, when we compare ourselves to pharma, we think we have a lot of attractive attributes. From a growth perspective, we highlighted at our Investor Day that over this decade we expect to grow our top line at 10% or more. That compares to pharma in sort of the mid-single digit range. In terms of scale and number of blockbuster products, we have 15 blockbusters in our portfolio, which compares nicely to pharma. Our cost of capital actually is very similar to pharma, in the mid-single digits. The stage of development where we're actually deploying capital is much different, though. We're investing, you know, generally in post proof of concept or approved products versus pharma, which is gonna be investing in preclinical all the way up to approved and label expansion. From a dividend yield, it's our yield is around 2%. Sorry, I missed this on... In terms of returns on investments, I think we, you know, we feel we have a very strong track record of delivering consistent low teens IRRs. You know, I think that the pharma track record is certainly up for debate. The last thing to highlight here is ownership, insider ownership. When we look at the ownership of our by our NEOs, named executive officers, they own 16% of Royalty Pharma, and that compares to less than 1% for the average large biopharma company. We are very aligned with investors, and we're very excited about the long-term potential of this business. With that one, and I mean if you're up to the Q&A. All right. Yeah. Thanks, Terry. For, for both of you guys, if you look at the higher impact kind of markets today where we've seen the biggest disruption and sort of captured investor attention, it's markets such as obesity and Alzheimer's. I mean, you guys had the economics with gantenerumab, but does allocation of capital toward these very large markets, which is mostly well-funded, big cap biopharma, what does that do to your kind of of opportunities? I know you talked about synthetic royalties being a big... You know, we haven't seen a lot of those deals, but, I'm just trying to think if, you know, if you sort of evolve to bigger dollar, higher markets, does that, you know, change the how you guys allocate capital? Yeah, I can start on that. Thanks, Geoff. That's a good question. We've talked about overall our strategy for how we approach the portfolio. Building a portfolio isn't really a bottoms up, you know, saying, you know, we need to go find something in obesity or we need to go find something in Alzheimer's, to use your two examples. It's really about what are the really exciting things that we're seeing over time and really be opportunistic to have the team and the platform to be able to really, you know, be flexible and tactically go into those areas. That's, that's how we have always run the business. I think we, you know, we're really excited to continue to do that. You know, certainly those are two, you know, really attractive, you know, really attractive markets and, you know, definitely on our radar in terms of looking for opportunities. You know, it also has to be right? We're not gonna sort of say I need a obesity, you know, investment to check that box. It's, you know, is that something that where we really think we have the opportunity to participate in a differentiated product or something that can really be meaningful. Right. You know, if you look at, say, the oncology space, you know, for many years we've gotten, you know, from, you know, a larger market, you know, say just overall breast cancer to biomarker specific, more narrow indications that are targeted, that enhances the probability of success, right? Lowers the risk profile. You're starting to see some of that spill over into other large, you know, therapeutic areas like, you know, inflammation, you know, immunology, et cetera. Does that change kind of the way you guys are thinking about it when in your review process, do you look at drugs that, you know, could serve the largest audience of opportunities or is it, you know... Would you favor ones that, you know, have a lower risk profile, higher probability of release being approved? Yeah. You probably won't be surprised to hear it's not one or the other. Yeah ... Right? In the terms of the way we look at it. I think one of the investment themes we highlighted at our analyst day last year was, you know, the rise of targeted therapies in new areas that aren't oncology and, you know, that's definitely something that has been on our radar thematically. You know, we made an investment with one example of that, which was Cytokinetics with, you know, with aficamten for hypertrophic cardiomyopathy as a targeted therapy for a, you know, brand new market where we haven't seen it before. You know, the other good thing sometimes with the targeted therapies is it can, you know, it can be a little bit of a, you know, a little bit of a competitive moat too, where, you know, maybe those spaces aren't as, aren't as crowded sometimes. Which, as everyone's talked about in oncology, is definitely something we're seeing in a lot of different spaces. You know, it's not one or the other. I think we're, again, looking at things where we can have high conviction, you know, in the clinical development and the commercial opportunity, depending on where that product is. Gotcha. You know, Terry, you mentioned you're looking at, you know, the balance between developmental stage investments and marketed products. Obviously, the capital markets have been pretty much shut for... I mean, this summer will be going on two years. Does that change how you guys would... You know, the strategy here to, you know, to invest in companies on their way up? Or is there any, you know, edit to kind of your process? We don't feel like the process has changed. I mean, certainly, maybe the top of the funnel. Right ... a little bit different, because you know, obviously, you know, the challenging capital markets are creating capital needs for many companies. Yep. For us, you know, the, the bar hasn't changed. Right. We're still looking for, you know, products that are having the biggest impact on patients, 'cause those are the products that, you know, we think are going to sell, that are gonna stand up against competition and that are gonna get reimbursed and ultimately be important royalties for us. You know, overall, the philosophy hasn't changed. We certainly are seeing a lot and, you know, we need to continue to maintain that really high bar. Right. That makes sense. You guys are typically asked this, but I feel like I, you know, I should at least throw it out there. Just given the macro environment, you know, can you speak a little bit to kind of the, the cost of debt just given the, you know, the evolution that we've seen in rising rates? We're in a fortunate position right now where, after we went public in 2020, we refinanced all of our debt. It was floating rate and, we all have now fixed, you know, rate, fixed long duration debt. We have very little sort of near-term exposure. 60% of our debt matures in 2030 and beyond, and we're borrowing right now at 2.25%. Now we do have maturity later this year, and I think, you know, we're still trying to assess what we're gonna do there. We have $2 billion of cash. It's a $1 billion maturity. We have flexibility, and I think it'll be a little bit pipeline dependent. That being said, you know, overall, you know, when we think about cost of capital, certainly, you know, the cost of capital for Royalty Pharma has increased. You know, I think that's reflected overall in the sort of risk-adjusted returns that we're targeting. Since we are in the business of recycling capital, you know, year in and year out, there is sort of a natural hedge in our business and that as cost of capital rises, the spread on what we're targeting doesn't really change and might even, might even increase as well. That is a very nice element to our business... Right ... versus, you know, maybe another, a more traditional pharma model where the sort of R&D costs aren't changing. Right You know, the return might change a little bit. Okay. That makes sense. Let's talk a little bit about the recently announced your share buyback program. That's a new capital strategy for you guys. You guys haven't historically done that. You know, just give us the thought process of what went into that and maybe, you know, if that's going forward something that we can count on on a regular basis? Thanks. Just so everyone knows, our board announced a $1 billion share repurchase authorization at the end of March, and it's something that we've been thinking about for a long time. At our investor day last May, we highlighted that our number one use of capital is royalties. That hasn't changed. The opportunities are really big there, and that's where we're gonna focus our time. We have a dividend. We're committed to continuing to pay the dividend. We said that we would look to add share repurchases as another tool over time. So at our sorry, at our AGM last June, as a UK PLC, we actually need shareholder authorization for a share repurchase, and so we got that. You know, I think that we thought as we looked at, you know, how the business has evolved, our cash position, the cash generation of the business, we thought that now made sense as a really, as a, as a tool to add to the, to the toolkit. We also... You know, it's undeniable that, you know, we see a lot of value in our, in our stock, and when we're assessing that and weighing it against royalty opportunities, like I said, royalty opportunities are always gonna be, you know, the primary focus. We think it's a nice complement and a way to return capital to shareholders and hopefully, create, you know, additional shareholder value. Let me ask you on the, you know, the rare disease portfolio. It's, you know, it's a, the largest sleeve that you guys have on your portfolio. You know, it's. Just talk about maybe about the strategy there. Is there. There's. It doesn't seem that there's been an intention to do that, but you do have kind of niche-ier markets that could eventually grow to become, you know, huge therapeutic categories like CF, for example, right? Yeah. Where does that sort of rank in the funnel and the selection process? Is orphan, you know, kind of a preferred, or, you know, is it just more about the science and what could ultimately yield the best economics? Yeah. I wouldn't say it's preferred, but certainly it's an area where, you know, when you think about a lot of the other risks in our business on the commercial side, it's an area where, you know, those can be more manageable as long as it's a product that has a really meaningful benefit to patients. I think that's been our real focus in orphan disease is, you know, if there is a product that, you know, really is meaningful to patients that those have done, you know, and they're, and I think this is an important point, are in the hands of a marketer that can maximize the value globally, right? 'Cause that's a really important part of the story, that that's, you know, those are things we like. You know, you've seen us make two investments in SMA as a good example between, you know, Evrysdi as well as SPINRAZA earlier this year, where, you know, those are two really great products, big unmet need and a, you know, in the hands of marketers who have, you know, can really drive those products globally where, you know, the ex-US opportunity is in excess of the US market. You know, those can be really great opportunities that way. We really pride ourselves on, you know, being therapeutic area agnostic. Right ... and just being opportunistic and, you know, trying to have an open mind when we look at assets and investing in what we view as the most exciting assets, whether it be in, you know, migraine or oncology or rare disease. We really try to be pretty, you know, keep an open mind when we're thinking about it. No, that makes sense. How has the, kind of the, risk level and the developmental stage, among the developmental stage deals, you know, has that evolved over time as you guys have seen, you know, sort of high-risk, high-reward indications, you know, kind of, I mean, go awry? I mean, are you guys looking at the menu of everything in SMid biotech? Probably too early stage for you, is there a greater tolerance for risk now that you've proven the model and be able to churn capital pretty effectively? Yeah. I... Two important things to think about there. I think one is, you know, no overall, I think our approach on, you know, on approach to development stage products has sort of stayed the same, which is doing the really deep work that our team is able to do. You know, can we generate the requisite conviction that this is gonna work and be a meaningful product? I would say, as to part of your question, you know, it would be silly of us, though, not to think about what are the advantages of the scale and looking across our whole portfolio, right? Sort of saying, "You know, there is room and should be a role in our portfolio for higher risk, higher reward opportunities." You know, some of those are, some of those are not gonna work out, but relative to the scale of our business, you know, having opportunity for, you know, really asymmetric upside is an important part of the strategy. You know, it's never gonna be. You know, it's never really gonna be a, you know, any part of the portfolio as a major part of it in terms of size, but certainly the benefits of being as big and diversified as we are, you know, allow us to have exposure to that. Yeah. With the some of the M&A that we've seen, and you guys have benefited from that, you know, being equity holders on some of the, you know, target companies, is that approach looking to the SMid biotech space? You know, is that something that looks more interesting now? You know, maybe it takes a little bit longer to de-risk an asset, you know, from a SMid cap biotech, but your returns may be on the takeout contribution of it. Yeah. No. We've had two nice success stories with Immunomedics where we invested $250 million, $75 million in equity and $175 million in royalty, mid-single-digit royalty. That company was acquired, and our equity, we received, I think, $385 million on our equity. It's a really nice return where we got all of our capital back plus a return, and now we have, you know, a royalty that's gonna go, you know, well into the 2030s that's on a, what we think is a very attractive product. Same thing happened with Biohaven. In the case of Biohaven, we did four separate transactions with them, and we invested around $800 million total. To date, we've already returned around one and a half billion dollars. Our first deal with them was in 2018. We've already returned one and a half billion dollars, and we're gonna have a, you know, a nice royalty on that franchise, which is now in the hands of Pfizer, which we think is great for the, you know, commercial prospects there. That royalty is gonna go, again, like, into the mid, late 2030s. It's definitely an area of, you know, a really nice opportunity for us. And I think that especially in the case of Biohaven, one of the things that we wanna make sure that our, you know, that the small and midcap biotech companies understand is we're gonna be there to grow with you over time. We did our first transaction with them was $150 million, and we did four transactions in a bunch of different flavors. It's part of the beauty of our business model is that we can be really flexible and we can grow with a company, and I think that that, you know, really accrued to the benefit of Biohaven and also Royalty Pharma. Right. The only thing I'd add to that is, you know, to the flexibility comment, you know, we don't come and say sort of this is the recipe, you know, for a given deal, that it has to have equity or not. You know, it's really a conversation with the partner. You know, sometimes it can be, how do we make the deal a little bit bigger, you know, without making the royalty be too high? You know, sometimes company has asked us for it because it's a, you know, it's a sort of it's aligning in some ways, you know, above and beyond the royalty. It can be a validation as well. Yeah, exactly. It's part of the conversation, but not, you know, gonna be in every deal. Right. Yeah, one of the things you guys mentioned at your Analyst Day last year was just the, you know, the focus going forward of, you know, of carved-out royalties, synthetic royalties, you know, on existing products. We haven't seen a lot of those. Is it that, you know, companies don't want to offer that up, or is it the, is it the stage of the company, or is it the, you know, you would find better opportunities somewhere else? Yeah, I think there have been lots of opportunities. You follow our space closely, right? There have been more of them over time. You know, we're also. You know, we've been at this a long time, and so, you know, we very much take a patient long view of this and are gonna, you know, wait for and, you know, really lead into the exactly the right opportunities and, you know, not necessarily chase things that we're not excited about. You know, I think it's all of those things together. I think we still firmly believe that, you know, with like the slide Terry showed, that, you know, raising capital via royalties is gonna be an important part of the recipe for companies over time. It's very much becoming that way already. You know, we think that piece is in place, and we're gonna pick our spots and, you know, be deliberate going forward. Yeah. I mean, we're really selective. We try to be patient, and we wanna make the right investments. We've always highlighted that, you know, the capital deployment pace can be uneven when you look at it at, in a single quarter, single year. Over time, it ends up being very consistent, and we think there's, you know, a line of sight to it growing significantly from where we've been. You know, we're optimally positioned to take advantage of that when the opportunity comes from a, you know, from a balance sheet perspective, from a access to capital perspective. We feel really the company's in a really great place. Right. When you look at the within the portfolio, the technology is represented by some of the royalties. You know, I'm just thinking about, say, mRNA technology went from nowhere to, you know, I mean, almost $100 billion right in... I mean, in... From COVID. Do you look at technologies that way? Do you say, "Okay, we need to have a horse in this race," you know, be it gene or cell therapy or, you know, viral delivery or... There's just a whole range of like. Yeah ... type of approaches. No, we certainly are aware of them and are following them. We don't think about it that way. Yeah. You know, we see the world in We're product people, right? You know, it's what technologies can produce products. You know, we... sometimes that can mean there's a little bit-